“I signed a personal guarantee for my company with a credit provider. The company has defaulted on payments and the credit provider now sent me a notice demanding payment under the guarantee. However, they sent it to the company office and not to my domicile address as contained in the guarantee agreement. Does this mean that the demand is not valid as it was not sent to the right address?”

What you are referring to is typically termed a mode of delivery clause which stipulates where and by which form (fax, email, post, by hand etc.) parties may provide formal notices to each other to enforce aspects of their agreement.

As a general rule our law of contract demands specific adherence to the provisions of an agreement, which includes adherence to the provisions of a mode of delivery clause contained in an agreement. However, to determine whether non-compliance with such a mode of delivery clause invalidates a demand sent under a guarantee agreement, our Supreme Court of Appeal recently had to review the position in respect of such mode of delivery clauses.

In the matter the court had to decide whether delivery of a notice of demand to a guarantor at an address other than the prescribed address in the mode of delivery clause contained in the contract, still constituted a valid demand. The court considered whether a mode of delivery clause in a contract should be interpreted strictly or prescriptively, or rather descriptively, meaning that the broader context should be considered and that it is not necessary for strict compliance.

The Supreme Court of Appeal found that in the current matter the mode of delivery clause was descriptive in nature and that as the demand was made and received even though not exactly as per the provisions of the mode of delivery clause, the demand was still valid as there was effective presentation of the demand to the guarantor.

This does not mean that mode of delivery clauses can therefore be ignored as the facts of each situation will determine the validity or not of a notice given. However, where there was effective presentation and receipt, our courts have now found that despite a lack of strict compliance, a notice of demand may still be valid.

In your situation therefore, it may be that there are grounds to argue that there was effective presentation of the demand despite non-adherence to the mode of delivery clause. Our advice is to consult your attorney and obtain advice regarding the correct action to be followed by you in respect of the demand and guarantee provided.

Source: DBM Attorneys

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